Interest
Cost of borrowing; paid by borrower to lender.
Formula
Interest = Principal × Rate × Time
Real World
When the Bank of England raised its base rate to 5.25% in 2023, thousands of UK businesses saw their variable-rate loan repayments rise, squeezing profit margins immediately.
Exam Focus
In calculation questions, confirm whether the rate is annual and whether time is expressed in years to avoid unit errors.
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